60 Minutes Overtime

Despite GOP scoffing, Geithner holds firm on taxes

(CBS News) Republicans in Congress trying to fend off a tax hike for the wealthiest Americans "really are in a difficult position," Treasury Secretary Timothy Geithner said on "Face the Nation" Sunday, three days after presenting them with President Obama's plan to avert the year-end so-called "fiscal cliff." But, he added, "there is no way we can get to a balanced plan that puts us back on a path to living within our means, protects Medicare, invests in things we need, if you extend those tax rates."

Despite the grim outlook from House Speaker John Boehner, R-Ohio, that the two parties are "almost nowhere" in nearing an agreement, Geithner said he sees the split body coming together before Jan. 1, when a series of tax hikes and spending cuts would go into effect, potentially hurling the United States into a dangerous recession. Largely barricading any plan to avert that "cliff" is disparity over whether to extend the Bush-era tax cuts for all Americans or only those making less than $250,000 a year.

"The only thing that stands in the way of an agreement that's good for the American economy is if a group of Republicans decide they're going to block any increase in tax rates on the wealthiest Americans," Geithner said. "I think it's very unlikely they choose to do that, of course, because there's so much at stake."

Democrats are "of course" open to threading into Mr. Obama's proposal points from the other side, Geithner said, but qualified that it's the GOP that needs to "move further" in what it's willing to give: "The Republicans, as you've heard, have conceded - and this is important - that they're prepared to raise revenues, raise taxes as part of this deal," he said. "But what haven't they told us yet is how far they're willing to go both on rates and other deduction limitations."

Even members of the president's own party, though, are expected to balk at some aspects of his plan, including a provision to impose a 45 percent estate tax rate on inheritances worth more than $3.5 million. But Geithner insisted the proposal will "absolutely" earn more than enough Democratic support.

"If you listen carefully to the political debate, there's very broad-based support now, and recognition of the need to let rates go up," Geithner said. But revenue garnered from the top two percent tax increase, even when coupled with tax reform, is "not enough," he continued. "We think we can go beyond that and lock in some carefully designed savings that helps us go back to living within our means.

"The president has laid out a very detailed, comprehensive plan for how best to do that," he said. "He's put on the table $600 billion in savings, on top of the trillion of dollars that we enacted last year. And they're very detailed, and they're very well designed."

For Republicans, though, the name of the game in bringing down the deficit is entitlement reform, particularly through sweeping changes to Medicare and Medicaid. Geithner said President Obama is committed to fixing entitlements, and has included $600 billion worth of reforms in his proposal over 10 years, "that build gradually over time because they're phased in carefully," he said. "So the outer year savings are even larger than that in that context. We think they're very good policy."

"Just a couple of examples" of those, Geithner continued, include "reforming farm subsidies - very important to do - lots of room to do sensible reforms in that context. And they can raise substantial amounts of money. In healthcare, we propose to a modest increase in premium for higher income beneficiaries, and we propose ways to make the government much smarter about how it buys medicine for Medicare beneficiaries."

Asked by Schieffer whether there's any alternative to raising tax rates on the top two percent of wealthy Americans, such as eliminating deductions, among other things, Geithner noted it's a "good question," but said his research doesn't support it.

"We've taken a careful look at this, and we think we should limit deductions," he said. "But if you look carefully at how to do this, there is no way to raise a meaningful amount of revenue relative to the size of our fiscal challenges by just limiting the value of deductions for the wealthiest Americans. There's just not enough room there. You can raise a lot of money if you're prepared to raise taxes significantly on middle class families by limiting their deductions, but we don't think that makes a lot of sense for them."